Keeping my Co. 401k

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micknc19
Posts: 11
Joined: Mon Aug 21, 2017 8:44 pm

Keeping my Co. 401k

Post by micknc19 » Sat Nov 16, 2019 11:16 am

I am currently retired and am in the process of deciding if I should keep my company 401k plan which is low cost with limited invest choices mostly index type funds or rolling it all to Vanguard. Performance is similar to index mutual funds you can get in the open market and It also has Common Asset Account I will not get any where else that does 3-4 % year

Thoughts and thanks in advance

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ruralavalon
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Location: Illinois

Re: Keeping my Co. 401k

Post by ruralavalon » Sat Nov 16, 2019 11:23 am

micknc19 wrote:
Sat Nov 16, 2019 11:16 am
I am currently retired and am in the process of deciding if I should keep my company 401k plan which is low cost with limited invest choices mostly index type funds or rolling it all to Vanguard. Performance is similar to index mutual funds you can get in the open market and It also has Common Asset Account I will not get any where else that does 3-4 % year

Thoughts and thanks in advance
It depends primarily on fund availability and expense ratios in your employer's 401k, as compared to an IRA at Vanguard.

What funds do you wish to use?

Are those funds available in your employer's 401k plan? If so what are the expense ratios for those funds as charged in your employer's 401k plan?

Will you be using the "Common Asset Account I will not get any where else that does 3-4 % year"? How much will you allocate to that? Is that rate guaranteed?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

jcchen
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Re: Keeping my Co. 401k

Post by jcchen » Sat Nov 16, 2019 11:30 am

I keep my index funds in my old co 401k because of

enhanced creditor protection with 401k (vs ira)
paying no tax for backdoor roth IRA conversion, where make traditional ira contribution then convert to roth ira.

if fees are high or fund selection is poor in old company, consider rolling over to new employer 401k

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David Jay
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Re: Keeping my Co. 401k

Post by David Jay » Sat Nov 16, 2019 11:31 am

Question: Does your former employer’s plan allow partial withdrawals?

If not, that alone suggests moving it by age 70.5 so you can pay your RMDs in an efficient manner. A unique feature of a 401K is that the RMD must be made from the 401K. You cannot aggregate the RMD like you can with other tax-deferred accounts, paying it from the account that you prefer to use.

I did not have great funds so I moved mine within a month of reaching 59.5 (distribution @59.5 was allowed by my employer’s plan). But I like the convenience of having everything in one place. I did a Roth conversion - just did an “exchange” of funds from one account to the other. A window popped up asking for the percentage of withholding for Fed and State. Done.
Last edited by David Jay on Sat Nov 16, 2019 11:36 am, edited 1 time in total.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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David Jay
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Re: Keeping my Co. 401k

Post by David Jay » Sat Nov 16, 2019 11:34 am

jcchen wrote:
Sat Nov 16, 2019 11:30 am
...enhanced creditor protection with 401k (vs ira)...
This is often stated here on BH but keep in mind that it is state specific. In my state (Michigan) there is no difference in asset protection between a 401K and an IRA, each person should research it for their own state.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

MathIsMyWayr
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Re: Keeping my Co. 401k

Post by MathIsMyWayr » Sat Nov 16, 2019 11:54 am

David Jay wrote:
Sat Nov 16, 2019 11:34 am
jcchen wrote:
Sat Nov 16, 2019 11:30 am
...enhanced creditor protection with 401k (vs ira)...
This is often stated here on BH but keep in mind that it is state specific. In my state (Michigan) there is no difference in asset protection between a 401K and an IRA, each person should research it for their own state.
What if you move later ...not a zero probability.

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David Jay
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Location: Michigan

Re: Keeping my Co. 401k

Post by David Jay » Sat Nov 16, 2019 12:00 pm

MathIsMyWayr wrote:
Sat Nov 16, 2019 11:54 am
David Jay wrote:
Sat Nov 16, 2019 11:34 am
jcchen wrote:
Sat Nov 16, 2019 11:30 am
...enhanced creditor protection with 401k (vs ira)...
This is often stated here on BH but keep in mind that it is state specific. In my state (Michigan) there is no difference in asset protection between a 401K and an IRA, each person should research it for their own state.
What if you move later ...not a zero probability.
I’m not moving to California... :wink:
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

retired@50
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Re: Keeping my Co. 401k

Post by retired@50 » Sat Nov 16, 2019 12:14 pm

David Jay wrote:
Sat Nov 16, 2019 12:00 pm
MathIsMyWayr wrote:
Sat Nov 16, 2019 11:54 am
David Jay wrote:
Sat Nov 16, 2019 11:34 am
jcchen wrote:
Sat Nov 16, 2019 11:30 am
...enhanced creditor protection with 401k (vs ira)...
This is often stated here on BH but keep in mind that it is state specific. In my state (Michigan) there is no difference in asset protection between a 401K and an IRA, each person should research it for their own state.
What if you move later ...not a zero probability.
I’m not moving to California... :wink:
I don't know about others on the forum, but when my assets started to exceed my coverage limits on things like auto insurance, I added a personal liability umbrella policy to cover my net worth. I may be presuming that this is what some people fear. Are folks concerned about some sort of judgement against them due to an accident of some sort, or do we, as Bogleheads, really think we'll wind up in bankruptcy because we got out of control with our credit cards...???

Regards,
Boggle - a game from Parker Brothers. Bogle - investor, founder of Vanguard.

MathIsMyWayr
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Location: CA

Re: Keeping my Co. 401k

Post by MathIsMyWayr » Sat Nov 16, 2019 1:38 pm

David Jay wrote:
Sat Nov 16, 2019 12:00 pm
MathIsMyWayr wrote:
Sat Nov 16, 2019 11:54 am
David Jay wrote:
Sat Nov 16, 2019 11:34 am
jcchen wrote:
Sat Nov 16, 2019 11:30 am
...enhanced creditor protection with 401k (vs ira)...
This is often stated here on BH but keep in mind that it is state specific. In my state (Michigan) there is no difference in asset protection between a 401K and an IRA, each person should research it for their own state.
What if you move later ...not a zero probability.
I’m not moving to California... :wink:
Guess which is which: :wink:
DAY DESCRIPTION HIGH / LOW PRECIP WIND HUMIDITY
NOV 16 Partly Cloudy 73°/50° 0% NW 8 mph 61%
NOV 16 Partly Cloudy 35°/16° 0% ENE 7 mph 68%

Emg
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Joined: Sun Nov 03, 2019 8:06 pm

Re: Keeping my Co. 401k

Post by Emg » Sat Nov 16, 2019 1:52 pm

I have changed job many times over the years and I always rollover the 401k. Almost every company got bought or merged, multiple changes to 401k, the location and makeup of the human resources staff, etc. The one time I waited 8 years to roll over I had problems getting my money out. They wanted me to call human resources of the company I left long ago to get permission. That company had outsourced IT right after I left so I was expecting lots of complications . I successfully argued with American Century and got my rollover but it was a learning experience. ALWAYS TAKE your money when you go.

Trader Joe
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Joined: Fri Apr 25, 2014 6:38 pm

Re: Keeping my Co. 401k

Post by Trader Joe » Sat Nov 16, 2019 1:59 pm

micknc19 wrote:
Sat Nov 16, 2019 11:16 am
I am currently retired and am in the process of deciding if I should keep my company 401k plan which is low cost with limited invest choices mostly index type funds or rolling it all to Vanguard. Performance is similar to index mutual funds you can get in the open market and It also has Common Asset Account I will not get any where else that does 3-4 % year

Thoughts and thanks in advance
I always rollover my 401k when I leave a company. Always.

Dottie57
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Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Keeping my Co. 401k

Post by Dottie57 » Sat Nov 16, 2019 2:12 pm

jcchen wrote:
Sat Nov 16, 2019 11:30 am
I keep my index funds in my old co 401k because of

enhanced creditor protection with 401k (vs ira)
paying no tax for backdoor roth IRA conversion, where make traditional ira contribution then convert to roth ira.

if fees are high or fund selection is poor in old company, consider rolling over to new employer 401k
I’ve kept mine for creditor protection too. My 401k has excellent options.

Dottie57
Posts: 8243
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Keeping my Co. 401k

Post by Dottie57 » Sat Nov 16, 2019 2:14 pm

retired@50 wrote:
Sat Nov 16, 2019 12:14 pm
David Jay wrote:
Sat Nov 16, 2019 12:00 pm
MathIsMyWayr wrote:
Sat Nov 16, 2019 11:54 am
David Jay wrote:
Sat Nov 16, 2019 11:34 am
jcchen wrote:
Sat Nov 16, 2019 11:30 am
...enhanced creditor protection with 401k (vs ira)...
This is often stated here on BH but keep in mind that it is state specific. In my state (Michigan) there is no difference in asset protection between a 401K and an IRA, each person should research it for their own state.
What if you move later ...not a zero probability.
I’m not moving to California... :wink:
I don't know about others on the forum, but when my assets started to exceed my coverage limits on things like auto insurance, I added a personal liability umbrella policy to cover my net worth. I may be presuming that this is what some people fear. Are folks concerned about some sort of judgement against them due to an accident of some sort, or do we, as Bogleheads, really think we'll wind up in bankruptcy because we got out of control with our credit cards...???

Regards,
I am concerned about liability with auto. And my cooking could be called a weapon at times. So I have 2 million umbrella.

tibbitts
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Joined: Tue Feb 27, 2007 6:50 pm

Re: Keeping my Co. 401k

Post by tibbitts » Sat Nov 16, 2019 2:16 pm

If you have a floor on the fixed account at 3% I'd keep it. If you have floor of 4%, your employer will have a lineup of Bogleheads begging to work there.

lakpr
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Joined: Fri Mar 18, 2011 9:59 am

Re: Keeping my Co. 401k

Post by lakpr » Sat Nov 16, 2019 2:17 pm

jcchen wrote:
Sat Nov 16, 2019 11:30 am
I keep my index funds in my old co 401k because of

enhanced creditor protection with 401k (vs ira)
paying no tax for backdoor roth IRA conversion, where make traditional ira contribution then convert to roth ira.

if fees are high or fund selection is poor in old company, consider rolling over to new employer 401k
Good reasons indeed, but not applicable to the OP specifically, as he/she is "retired", so presumably no more earned income, so no more backdoor Roth.

I kept my old 401k in tact because my current MegaCorp 401k plan did not have a good bond fund choice. They offer only Metropolitan West fund and Pimco fund, at expense ratios of 0.43% and 0.71%, whereas my old employer's 401k plan had Vanguard Bond Index fund at 0.05%. I therefore use my current 401k plan to hold all stocks (contributions to only S&P 500 index fund), and rebalance every so often exchanging equities to bonds in the old 401k to get to my asset allocation ration of 70:30

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David Jay
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Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Keeping my Co. 401k

Post by David Jay » Sat Nov 16, 2019 3:08 pm

MathIsMyWayr wrote:
Sat Nov 16, 2019 1:38 pm
David Jay wrote:
Sat Nov 16, 2019 12:00 pm
MathIsMyWayr wrote:
Sat Nov 16, 2019 11:54 am
David Jay wrote:
Sat Nov 16, 2019 11:34 am
jcchen wrote:
Sat Nov 16, 2019 11:30 am
...enhanced creditor protection with 401k (vs ira)...
This is often stated here on BH but keep in mind that it is state specific. In my state (Michigan) there is no difference in asset protection between a 401K and an IRA, each person should research it for their own state.
What if you move later ...not a zero probability.
I’m not moving to California... :wink:
Guess which is which: :wink:
DAY DESCRIPTION HIGH / LOW PRECIP WIND HUMIDITY
NOV 16 Partly Cloudy 73°/50° 0% NW 8 mph 61%
NOV 16 Partly Cloudy 35°/16° 0% ENE 7 mph 68%
Florida has 100% exemption for IRA assets...
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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CalculatedRisk
Posts: 179
Joined: Tue Sep 11, 2018 8:04 pm

Re: Keeping my Co. 401k

Post by CalculatedRisk » Sat Nov 16, 2019 7:55 pm

retired@50 wrote:
Sat Nov 16, 2019 12:14 pm
I don't know about others on the forum, but when my assets started to exceed my coverage limits on things like auto insurance, I added a personal liability umbrella policy to cover my net worth. I may be presuming that this is what some people fear. Are folks concerned about some sort of judgement against them due to an accident of some sort, or do we, as Bogleheads, really think we'll wind up in bankruptcy because we got out of control with our credit cards...???

Regards,
That’s not how it works, unfortunately. Say you have $250k in assets and insurance coverage of $300k. What happens when there is a judgement against you for $500k? Insurance pays $300k and you are on the hook for the remaining $200k.

My strategy is to have enough insurance that it will be worth it for the insurance company to hire a lawyer to defend in court.

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Watty
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Joined: Wed Oct 10, 2007 3:55 pm

Re: Keeping my Co. 401k

Post by Watty » Sat Nov 16, 2019 9:01 pm

Two things to consider.

1) The inheritance rules for a 401k will depend on the details of the 401k detailed documents and these can be a bit complex and less favorable than for an IRA.

https://www.kitces.com/blog/non-spouse- ... ent-plans/

Running a 401k plan costs money so your company really does not want you or your heirs to stay in the 401k plan for decades after you retire.

2) The 401k may not be around forever. The company could go through a merger and the good 401k plan could be merged into a bad plan. The company can also change 401k companies to save money. The company could also go out of business and discontinue the 401k plan. I do not want to deal with anything like that when I am 85 and in a nursing home.

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Stinky
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Location: Sweet Home Alabama

Re: Keeping my Co. 401k

Post by Stinky » Sun Nov 17, 2019 10:13 am

micknc19 wrote:
Sat Nov 16, 2019 11:16 am
It also has Common Asset Account I will not get any where else that does 3-4 % year
OP - can you give us any more information about this "Common Asset Account"? What are the rate guarantees, if any? Do you have any money in that Account right now? And would you plan to use that Account as part of your fixed income allocation going forward?

When I retired, I rolled my 401(k) into an IRA at Vanguard, so that I could have all my assets at one place, and to avoid the separate RMD requirement if I had both 401(k) and IRA. But I might have made a different choice, and not rolled all my money, if I had access to a Common Asset Account that earned 4%.
It's a GREAT day to be alive - Travis Tritt

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